AHF Deal to Purchase Armstrong in Jeopardy Over Use of Armstrong Brand Name
Lancaster, PA, July 22, 2022-"A court fight over the use of the Armstrong name threatens to derail the $203 million sale of bankrupt Armstrong Flooring, throwing the future of hundreds of local jobs into doubt,” according to Lancaster Online.
Armstrong World Industries (AWI) spun off the flooring part of its business in 2017 and retained the ceilings division.
“The sale was expected to close Friday, with Mountville-based AHF Products set to acquire Armstrong Flooring’s Lancaster County operations, a move AHF said would preserve a substantial number of the 606 jobs at Armstrong Flooring’s facilities.
“Instead, the day will begin with a 10 a.m. hearing before a Delaware bankruptcy judge who will consider Armstrong Flooring’s lawsuit to force Armstrong World Industries to provide written consents that will allow Armstrong Flooring’s buyer, AHF Products, to use the Armstrong name for its products, something that is considered a key asset in sale.
“Such written consents from Armstrong World Industries are a condition of the sale and without them Armstrong Flooring warns that ‘the sale would not close.’
“In such a case, Armstrong Flooring warns in its Wednesday filing, that ‘this case will likely need to be converted to a Chapter 7 liquidation, which will realize far less value for creditors and cause the loss of hundreds of jobs that would otherwise be preserved, and harm to thousands of retirees.’
“In its suit, Armstrong Flooring says its 2016 spinoff from Armstrong World Industries included ‘a perpetual, royalty-free license’ to sell flooring under the ‘Armstrong’ name while Armstrong World Industries could use ‘Armstrong’ to sell ceiling and wall products.
“As it sought buyers through the bankruptcy process, Armstrong Flooring says Armstrong World Industries didn’t object to a ‘contract assumption notice’ Armstrong Flooring provided and was deemed to have consented. Nevertheless, Armstrong World Industries has not provided written consent.
“In its filing, Armstrong Flooring says the first time Armstrong World Industries indicated there might be a problem was on June 28, when an Armstrong World Industries attorney emailed to say providing written consents was ‘looking like a no-go.’ Two weeks later, the same attorney for Armstrong World Industries advised there was ‘NFW’ Armstrong World Industries would provide the written consents, using an acronym that stands for ‘no (expletive) way.’
“Instead, a proposal was made for a six-month license for successful bidders to use the name, with a possibly of negotiation for more, a suggestion Armstrong Flooring’s filing said was a ‘non-starter.’
Even without this issue, Today, almost half of Armstrong's corporate support, and sales and marketing employees were to be realeased from their employment roles. AHF is a leaner operation than Armstrong, and many of the roles were duplicate. In addition, Armstrong operated a direct sales team, which AHF does not include as part of its to-market strategy. Some of these employees had tenure of over 20 years.